SAT | Appellant directed to pay simple interest on the amount withdrawn at relevant bank rate to SEBI

Securities Appellate Tribunal (SAT), Mumbai: The Coram of Tarun Agarwala, J., (Presiding Officer), Dr C.K.G. Nair (Member) and M.T. Joshi, J., (Member) disposed an application filed for the calculation of rate of interest on a certain principal amount with the direction to the appellant to pay an additional sum of Rs 10 lakhs.

The facts were that in 2004 SEBI raised the demand of Rs 4,64,17,206 towards principal amount and interest under Securities and Exchange Board of India (Interest Regularization Scheme, 2003) as fees under the Brokers Regulations. The said demand was challenged by the appellant before the Tribunal which was allowed in 2005 and SEBI was directed to refund the aforesaid amount which had already been paid by the appellant. The order of the Tribunal was challenged by SEBI before the Supreme Court of India. During the pendency of the appeal, the Supreme Court permitted the appellant to withdraw the amount deposited with this Tribunal. Consequently, the appellant withdrew a sum of Rs 6,20,12,878 towards principal amount and interest accrued thereon. The demand raised by SEBI in 2004 was affirmed and the amount became payable along with interest. SEBI, accordingly called upon the appellant to pay a sum of Rs 11,59,57,867. The contention was whether the appellant should pay a simple interest or compound interest on the principal sum. The Tribunal by an order had held that SEBI was not entitled to charge compound interest and that the appellant was liable to pay simple interest on the amount withdrawn at relevant bank rate/rates prevailing from time to time.

The Tribunal stated that simple interest was required to be calculated which the parties failed to calculate in the correct perspective. Without going into the mechanics of exact calculation, it found appropriate in the interest of justice to direct the appellant to deposit a further sum of additional Rs 10 lakhs. [Prebon Yamane India Ltd. v. SEBI, 2019 SCC OnLine SAT 17, dated 28-03-2019]

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